Tesla Motors Inc (NASDAQ:TSLA) investors can talk about the strength of the company all they want, but it’s another Elon Musk property that’s really grown this year. SolarCity Corp (NASDAQ:SCTY) shares have increased by more than 190 percent this year, making Tesla gains of 170 percent look tiny in comparison. The solar energy firm’s shares boomed again today on the announcement of new financing from Goldman Sachs Group, Inc. (NYSE:GS).
According to the terms of a deal announced today, Goldman Sachs Group Inc. (NYSE:GS) will finance $500 million worth of solar projects at SolarCity Corp (NASDAQ:SCTY). At time of writing, shares in the company had risen by almost 11 percent to sit at $35.69. The move may have been a little disproportionate, but there’s a couple of good reasons.
The deal will see the investment bank finance the installation of 84 megawatts of solar power. The deal is the largest of its kind ever to take place. Goldman Sachs Group, Inc. (NYSE:GS) previously financed 16 megawatts of the company’s solar installations.
SolarCity Corp (NASDAQ:SCTY) may be a little too tied up with Elon Musk for its own good. Tesla Motors Inc (NASDAQ:TSLA) performance in the first few months of the year, and the cult of personality surrounding its CEO Elon Musk, has been attractive to many looking for alternate Musk investments. Since Tesla announced its incredible first quarter earnings report, shares in SolarCity Corp (NASDAQ:SCTY) have increased by close to 48 percent.
There is also a significant amount of short interest in SolarCity Corp, as there would be in any unprofitable experimental company that has seen its value triple since the start of the year. Solar stocks are doing well, but SolarCity Corp (NASDAQ:SCTY) is still an unknown quantity. Shorters see a decent risk reward in shorting a high-growth no-cash company, but good news usually has a disproportionately positive effect on stock with a large short interest.
The news arrives just a day after Tesla Motors Inc (NASDAQ:TSLA) shares ballooned on the announcement that the electric car company would have more access to capital in the for of an additional offering of shares, and the issuance of more than $500 million in convertible bonds.
Whether or not the SolarCity Corp (NASDAQ:SCTY) association with Musk is dangerous for the company’s stock doesn’t really matter. If Musk were to visibly disassociate himself from it now, shares would crash. It’s a dangerous time for investors in the company, though the reward has surely been worth it so far.
